Re: [CANSLIM] Wedging example: CECO

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Wedging example: CECO
Date: Thu, 5 Sep 2002 12:16:51 -0500
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Hi Mike,

From an intermediate term CANSLIM perspective, negative divergence can
signal both "stay away from a potential breakout" and/or "time to sell,"
depending on the technical condition, the market, etc.

From a short term trading perspective, and from a short-seller's point of
view, negative divergence can signal a setup. Whether one would short off a
failing top (and/or breakout) or as a pullback/continuation in a downward
trend is a matter of preference. The little bit that WON addresses on
shorting, he much prefers continuations in downward trends....scouting
setups when RS<=30 and other fundamental indicators are lagging. This is one
of the reasons why there's a big "gap" in the RS's if you look at a DGO
printed product company report. You'll see a lot of stocks with RS>=70ish
(long setups) and a lot with RS<=30 to 40ish (short setups) and not much in
between.

Katherine

- ----- Original Message -----
From: <michael_niemotka@baxter.com>
To: <canslim@lists.xmission.com>
Sent: Thursday, September 05, 2002 11:53 AM
Subject: Re: [CANSLIM] Wedging example: CECO


|
| Is negative divergence a good sign to spot a good short candidate?
|
|
| Mike Niemotka , PE
| Sr. Principal Engineer
| Baxter Healthcare Corporation
| Route 120 & Wilson Road
| Round Lake, IL 60073
| Tel (847) 270-4075
| Fax (847) 270-4525
| michael_niemotka@baxter.com
|
|
|
|                     "Katherine Malm"
|                     <kmalm@earthlink.net>         To:
canslim@lists.xmission.com
|                     Sent by:                      cc:
|                     owner-canslim@lists.xm        Subject:     Re:
[CANSLIM] Wedging example: CECO
|                     ission.com
|
|
|                     09/05/2002 10:18 AM
|                     Please respond to
|                     canslim
|
|
|
|
|
|
| Hi Dan,
|
| Absolutely and good point...just a specific kind of divergence, i.e. Price
| v. Volume action.
|
| CANSLIM has several good divergence indicators such as price rising while
| the RS Line is nonconfirming...i.e. diverging...price moving up and the RS
| Line moving down. (negative divergence) A good positive divergence
| indicator
| is price falling back or moving sideways with the RS line moving up. Good
| indication that this stock is building steam and outperforming relative to
| the market, despite the price action.
|
| Katherine
|
| ----- Original Message -----
| From: "Dan Forant" <dforant1@nycap.rr.com>
| To: <canslim@lists.xmission.com>
| Sent: Thursday, September 05, 2002 9:51 AM
| Subject: Re: [CANSLIM] Wedging example: CECO
|
|
| | Also divergence?
| |
| | DanF
| | ----- Original Message -----
| | From: "Katherine Malm" <kmalm@earthlink.net>
| | To: <canslim@lists.xmission.com>
| | Sent: Thursday, September 05, 2002 10:41 AM
| | Subject: Re: [CANSLIM] Wedging example: CECO
| |
| |
| | > Here's a good wedging example:
| | > http://WallStreet-LLC.com/canslim/PHA090402.jpg
| | >
| | > ----- Original Message -----
| | > From: "Katherine Malm" <kmalm@earthlink.net>
| | > To: <canslim@lists.xmission.com>
| | > Sent: Thursday, September 05, 2002 9:37 AM
| | > Subject: Re: [CANSLIM] Wedging example: CECO
| | >
| | >
| | > | Hi Kelly,
| | > |
| | > | For the most part, the action on the right side of CECO's "V" cup
was
| | > | wedging, just as you noted. You had to pick the toughest chart in
the
| | > | *universe* though.... Prior to that sudden V-cup, the basing action
| was
| | > | actually constructive. Since then, it's pretty much a nightmare of
| | > activity
| | > | and very difficult to read. The first area you marked as a pivot is
| iffy
| | > for
| | > | 2 reasons. First, the base, having been so deep, has to be at least
6
| | > weeks
| | > | in length to be valid. That means the earliest a valid pivot could
| form
| | > | would be about 8/2. You can see the action there is a little
suspect,
| | > | forming a sloppy handle at best. In the handle itself, you actually
| want
| | > to
| | > | see volume dry up, but the problem is that this stock took a big
| plunge
| | at
| | > | the start of the handle. One could certainly argue that the handle
| | "moved
| | > | sideways" but I'd be disinclined to do so because of the wedging
| action
| | to
| | > | get there.  That, combined with a very low volume breakout attempt
on
| | 8/15
| | > | just seals the deal...this stock didn't want to go *anywhere.* I'll
| bet
| | > the
| | > | strong action in the group has had more to do with it's ability to
| hang
| | in
| | > | there than anything else. I wouldn't, as a result look at the high
| 8/16
| | as
| | > a
| | > | "pivot" but instead a pull back into the base. The only thing that
| can
| | > save
| | > | CECO at this point is a nice tight sideways consolidation on quiet
| | volume.
| | > | If it can do that, then I'd say it's ready to move on. If it stays
| wide
| | > and
| | > | loose as it's been, then hasta la vista baby.
| | > |
| | > | Katherine
| | > | ----- Original Message -----
| | > | From: "Kelly Short" <kshort@kellyrshort.com>
| | > | To: <canslim@lists.xmission.com>
| | > | Sent: Wednesday, September 04, 2002 8:34 PM
| | > | Subject: [CANSLIM] Wedging example: CECO
| | > |
| | > |
| | > | | Katherine,
| | > | |
| | > | | To continue your point on wedging- would this stock be an example
| of
| | > | wedging
| | > | | action?
| | > | |
| | > | | http://www.kellyrshort.com/canslim/CECOwedgeexample.gif
| | > | |
| | > | | Kelly
| | > | |
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